Consolidation has changed the banking industry nationwide, and Birmingham is no exception

According to a story from the Charlotte Business Journal, bank consolidation – which has been prevalent over the last two decades, will continue over the next 20 years, and should continue to impact the banking scene locally.

BB&T Chairman Kelly King said on CNBC’s business program “Squawk Box” Tuesday morning that consolidation within the banking industry will continue, with likely fewer than 20 regional and national banks dominating the market within the next 20 years.

King was joined on the program by former Wells Fargo Chairman and CEO Dick Kovacevich, who said the large fixed costs of complying with increased regulation, such as the Dodd-Frank Act passed in the wake of the recession, is driving big banks to get even bigger.

This trend would make business for community banks, which have grown tremendously in number and in prominence in Birmingham in the wake of the recession, a lot more difficult to manage and maintain. Banks such as ServisFirst, National Bank of Commerce, Oakworth Capital Bank and Cadence Bank have thrived in Birmingham, but if the large banks keep getting larger, this might force community banks to have to sell out.

Already, the Birmingham banking scene has seen exponential change in the last two decades. No longer do SouthTrust Bank, Amsouth, Regions and Compass Bank hold down the metaphorical banking fort in downtown Birmingham. SouthTrust was acquired by Wachovia which was then acquired by Wells Fargo. Amsouth merged with Regions, and Compass was acquired by BBVA. The story has been told many times. But one thing is clear. The banking identity in Birmingham changed forever.

If what King said is correct, more consolidation is to come, and community banks will need to find a proper niche and start getting creative with their services to stay in competition.

Michael Seale covers the banking, finance and legal beats for the Birmingham Business Journal